Will The Budget Impasse Kill Tax Reform?

The House is expected to break for August recess Friday and a vote on the 2018 budget resolution, which includes the reconciliation instructions for tax reform, remains notably absent from the legislative calendar.

While Republicans — including three members of the House Freedom Caucus (HFC) — unanimously voted to move the legislation out of the House Budget Committee, GOP leadership lacks the support needed for it to pass a floor vote.

The measure is receiving pushback from members across the Republican conference, with conservatives pushing for spending cuts that go beyond the bill’s $203 billion in mandatory savings while moderates have expressed concerns the reductions go too far. In addition, HFC members said they won’t vote for the bill until they given specific details on the party’s plans for reforming the tax code.

“Well, the Freedom Caucus is the one that said they won’t vote for it, even though it came out of the committee unanimously and Freedom Caucus members voted for it,” House Majority Leader Kevin McCarthy told The Daily Caller News Foundation Monday. “So I’m not sure of what their point is — have to figure that one out.”

HFC Chairman Mark Meadows said he has yet to receive the information needed to earn his support and remains confident the budget would fail if leadership chooses to bring it to the floor in its current form.

“We’re asking the White House and obviously they’re having discussions with leadership,” he told reporters after the HFC’s meeting Monday evening. “They’ve [the administration] indicated that they’re making progress on that [providing details]. You know, they’re scoring a number of different models, that’s what I understand. So I think it’s critically important that we have more details before we leave.”

Conservatives have been looking for assurance the border adjustment tax (BAT) — a key revenue raiser in GOP leadership-backed “A Better Way” tax reform blueprint — won’t be included in the plan. Top negotiators have struggled to find an alternative to the BAT, which places a levy on imports while exempting exports. Critics of the provision argue the BAT is a consumer tax that would lead to an increase in prices on a number of goods.

A number of members of the moderate Tuesday Group have also pushed back on the 2018 budget blueprint, citing very different reasons than the HFC.

Pennsylvania Rep. Charlie Dent — a co-chair of the Tuesday Group — said he would prefer a bipartisan budget deal. Dent said he believes the proposed reduction to mandatory spending goes too far, arguing cuts to certain safety-net programs are impractical and will complicate their plans to pass permanent tax reform.

“We want the budget resolution to reflect the actual top line spending number. We want that and we also think that reconciliation instruction should focus on tax reform,” he told The Daily Caller News Foundation Tuesday. “That will be hard enough to deal with, tax reform, and if we put too much on the mandatory side in there, we will make it that much harder to deal with, to enact tax reform — that simple.”

The impasse could prove to be problematic for GOP leadership and the Trump administration’s plans to pass tax reform before the end of the year. Top Republicans have already delayed their tax reform timeline, having previously called for the legislation to be passed by August.

House Committee on Ways and Means Chairman Kevin Brady said he is encouraging members of his party to vote for the measure so they can begin the process of crafting tax reform legislation.

“Look — no budget, no tax reform. It’s pretty clear. So we can have honest disagreements over what spending levels ought to be, but if as Republicans, we’re serious about delivering tax reform this year, we better be serious about delivering the budget this year.”

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